Europe phthalic anhydride contracts follow OX decrease

05 April 2013 23:59[Source: ICIS news]

LONDON (ICIS)--European phthalic anhydride (PA) contract prices for April have decreased by €20/tonne, in line with the full orthoxylene (OX) feedstock price reduction, market sources confirmed on Friday.

The majority of PA contracts are agreed on a formula basis, linked to the OX feedstock move. The European OX contract price settled in April at €1,128/tonne ($1,455/tonne) FD (free delivered) NWE (northwest Europe), down by nearly 2% from March.

PA contract price ranges in April for liquid and flake product have moved down to €1,335-1,385/tonne FD NWE, according to ICIS.

"It is not a big move," one seller said. "But it is the first time that prices have decreased this year."

Spot numbers for PA are yet to be affected by the decrease in feedstock costs, with sources mainly quoting rollovers on the back of some reported firming demand. Activity is relatively slow for spot, as many customers are covered under contract.

Sellers said that demand for plasticizers was very strong and that offtake into the unsaturated polyester resin (UPR) sector was also starting to improve, following a slow start to the season.

One producer said customer stocks were low, which meant that if the construction season did take off suddenly it would be a significant boost to demand.

But buyers said that demand for UPR was still very slow and had yet to pick-up. Market players were hoping for an improvement in the weather. Downstream markets were being adversely affected by the economic slowdown, and many did not expect a strong second quarter overall, despite it being the traditional high season.

"NWE in general is still waiting for the seasonal peak," one source said. "Demand is not a disaster, but it should be better than it is."